Cap and trade: more of the same?

With the Copenhagen Climate Conference just around the corner, world leaders, environmentalists, and economists are all debating the best mechanisms by which we can combat global climate change while continuing to grow the world economy. Most of these discussions (though not all) center on the concept of “cap and trade.” If you’re a little fuzzy on the idea, or know it but have a tough time explaining it to others, you’re not alone: it’s fairly complex on its face, and presents policy makers with a range of choices for harnessing market forces to reduce greenhouse gas emissions.

The video’s subtitle, “Why You Can’t Solve a Problem with the Thinking that Created It,” summarizes its approach to the details of cap and trade systems under debate. With humor and intelligence, “The Story of Cap & Trade” provides a lucid explanation of the concept itself, and argues that many of the choices leaders make in Copenhagen could create a system so open to gaming that it becomes essentially useless… except to those brokering credit and offsets trading.

Free marketeers probably won’t like Leonard’s arguments, but they’re definitely worthy of consideration. Cap and trade has promise… but, as the video argues, the devil will mostly certainly be in the details.

Is cap and trade. with the right caps and incentives, a viable method of addressing climate change? Or is it another system just begging to be gamed? Let use know… in the comments.